Biden’s student-loan discharge program is now suspended, unless and until the Supreme Court reverses the Eighth Circuit.
In an important, if unsurprising, ruling on Monday, the Eighth Circuit federal appeals court reversed a lower-court ruling that six states lacked standing to challenge President Biden’s student-loan discharge debacle. Consequently, the program is frozen by a national injunction.
Last month, Judge Henry Autrey (an appointee of President Bush-43) issued a flawed decision holding that the states — Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina — lacked standing. (At Volokh, Ilya Somin had an excellent post explaining the ruling’s errors.)
As a number of us have noted, Biden’s unilaterally decreed program is blatantly lawless (though it no doubt helped buy Democrats the loyalty of young voters in time for the midterms). Realizing this, the administration has spent more of its energy making the gambit difficult to challenge legally than in trying to justify it on the merits. Judge Autrey bought its dubious argument that Missouri, the state on which plaintiffs most heavily rely for standing, lacked the basis to show a concrete, particularized, unique harm — the standard for establishing a right to sue.
Autrey reasoned that the entity that administers loans in the state — the Missouri Higher Education Loan Authority (MOHELA) — is not actually an arm of the state, and therefore Missouri and the other states could not rely on potential harm to it. This rationale seemed at once both incorrect and beside the point. MOHELA was created by the state legislature, and most of its seven members are selected by state officials, including the governor. Moreover, even if, for argument’s sake, MOHELA were deemed to be a completely private actor, it has still been harmed because the Biden program would deny it revenue. Ergo, MOHELA itself would have standing even if the state did not.
In its unanimous six-page ruling on Monday, the three-judge panel determined that it did not need to resolve the question of whether MOHELA is a state agency — though it strongly suggested that it is, and observed that other judicial decisions had regarded it as such. The court was able to sidestep this issue because it found Missouri suffered harm in any event.
By statute, MOHELA is required to provide funding to support capital projects at public colleges and universities. In addition, the state General Assembly has created another fund, the Lewis and Clark Discovery Fund (LCD Fund), from which the General Assembly also appropriates money for, among other things, capital projects at state colleges and universities. By statute, the state mandated that MOHELA must contribute $350 million to the LCD Fund, but MOHELA has come up short, by $105.1 million.
Based on all of this, the appellate panel concluded that the “unanticipated financial downturn” MOHELA would suffer due to the Biden loan-discharge plan would “prevent or delay Missouri from funding higher education at its public colleges and universities.” That is, it will hinder MOHELA from providing the state’s LCD Fund with the money it still owes. Missouri would consequently suffer concrete harm.
Because it determined that Missouri has standing, the panel concluded that it need not wrestle with the Biden administration’s claim that the other suing states lack standing. If one party has standing, the suit may go forward.
With standing settled, the court held that the program should be enjoined until there can be complete judicial consideration of the case and a ruling on the merits. The panel did not need to find that the plaintiffs were likely to prevail on the merits. Under circuit precedent, it was sufficient that they’d raised a serious issue and would be irreparably harmed if the loans were forgiven (whereas, the administration will not suffer — except perhaps politically — from a delay). The court also determined that because the states and entities involved, including MOHELA, are such substantial players in the national loan market, there would be little point in trying to fashion an injunction that is not national in scope.
As a result, Biden’s program is now suspended, unless and until the Supreme Court reverses the Eighth Circuit. That is unlikely.